friends from the quakers. i have to say, generally i'm against nonprofits because even though you're a nonprofit, you still compete for buildings and then you throw out tenants. so, i would ask, has san francisco city attorney looked into this, the city's aligning with a religion, should they distance themselves on that grounds? >> thank you. are there other members of the public who wish to speak on this item, item number 5? seeing none, public comment is closed. do we have a motion? >> so moved. >> we have a motion to send this item forward with recommendation and we can do that without objection. thank you. item 6. >> item number 6, resolution establishing the appropriations limit for fy 2012-2013 pursuant to california constitution article xiii b. >> thank you very much for this item from the controller's office. we have [speaker not understood]. >> thank you, members of the committee. neil levinson, [speaker not understood] from the

controller's office. i'll be very brief and happy to answer questions. this resolution before you is required by the california constitution and government code. each year the city needs to confirm its appropriations limit under the gan provisions. in this calculation we have done, it reflects through calculations allowed by the state code that we have a 3.77% local income growth and an 0.4% -- 0.47% population growth and this allows for combined growth in the gam limit from the amount that you established last year of 2.53 billion to a new level of 2.63 billion for fiscal year 12-13. under the allowable calculations, we have shown that the budget for appropriations that are covered by this is at currently 2.47 billion, so this reflects a level still 168 million below

the gam limit. if the city were to collect so much revenue that it was above the gam limit, the law would require us to either change the rates to return or some other way return that excess revenue to tax payers or go to voters to ask voters to approve an increase in the limit, but we have not reached that point yet. a couple of other points you might be interested in, we did look back at fiscal year 11-12 with the initial budget we expected to be well over 200 million below the gam limit, but 11-12 was a year of very strong revenue growth above our budget. but still, we still den end the year well within the limit, at least $70 million below the budget in 11-12. also looking forward even with our strong revenues, our preliminary forecast shows that we should still be within the limit and this would be 13-14 by over $100 million, under our current growth assumptions, probably over 150 million. it will be something that as we work with the mayor's office

mayor's office from the five-year plan, we will keep monitoring this in the future to make sure we inform you as soon as possible if the city looks like it's bumping up against this state limit. i'm happy to answer the questions. >> there are no questions from the committee at this time. why don't we go to the budget analyst report. >> good morning, chair chu and supervisor kim. [speaker not understood] budget legislative analyst office. as mr. levinson said controller 2 options for calculating the gam limit can either be calculated on the california -- pertain to capital income in california or the percentage change in the local assessment of new nonresidential construction. it's based on controller's calculations, the limit is 2.6 billion for fiscal year 2012-2013 even if they chose the alternative calculation, it would still have been 2.5 billion. in either case it exceeds the estimated tax code [speaker not understood] * and we recommend approval. >> thank you very much.

why don't we open this item up for public comment. are there members of the public who wish to speak on item number 6? seeing none, public comment is closed. can we move this item with recommendation? >> so moved. >> okay, we'll do that without objection. thank you. item 7, please. >> item number 7, resolution approving the 2012 grant application for the united states department of housing and urban development continuum of care program and fulfilling the san francisco board of supervisors review and approval process for all annual or otherwise recurring grants of $5,000,000 or more. >> thank you very much. >> good morning, [speaker not understood], supervisor chu, supervisor kim. i'm here representing the local homeless board and i also have staff from human service agency [speaker not understood]. and we are bringing to your attention the proposed resolution approval for the

upcoming 2012 continuum of care fund and p obligation we're doing for hud. we've been doing this since 2008 because we're required to bring the resolution to you since then. as you know, the san francisco local homeless coordinating board which is the san francisco obligation for the [speaker not understood] housing and urban development continuing care grants homeless assistance. in 2011 computation had awarded san francisco over $19,74 3,333 -- 34 dollars in competitive continuous care homeless assistance grants. actually the first in the country last year. in 2012 the proposed resolution would [speaker not understood] to apply for $23,572,2 80 including an estimated $99 3,9 10 devoted to new permanent

housing for currently homeless people [speaker not understood]. we call touch-tone bond project which we' been doing everywhere. [speaker not understood] provide homeless individuals [speaker not understood]. and you have in your package attached the list of all the organizations that are going for renewal. as you know, we undertake intense community process for determining priorities and the competition process each year. for this year's competition, there will be a [speaker not understood] discussed at our funding committee meeting [speaker not understood]. the funding committee considered community priorities and decided [speaker not understood] materials for the local homeless for approval. as part of the review process, the human service agency and the local homeless will review applicants to score the applications according to our community process. we also had a panel of

nonconflicting people that score the applications for new projects. [speaker not understood] delivery to applicants any project that is at risk of not being funded will have the opportunity to appeal. we just want to bring the resolution and hope that the full board will approve it before december. >> thank you very much for your presentation. >> thank you. >> thank you. for the human services agency, is there anything that you would add to the presentation? thank you. okay. this item i believe does not have a budget analyst report. since this is a grant application and does not yet have a fiscal impact. so, why don't we open this up for public comment. are there any members of the public who wish to speak on item number 7? seeing none, public comment is closed. >> so moved. >> okay, we have a motion to send the item forward with recommendation, we can do that without objection. okay. item 8, please. >> item number 8, resolution adopting findings under the california environmental quality act, c-e-q-a guidelines, and san francisco administrative code chapter 31, including the adoption of a mitigation monitoring and reporting program, related to

the funding of project no. cuw 26403, the geary road bridge project, in alameda county and directing the clerk of the board of supervisors to notify the controller of this action. >> [speaker not understood]. >> [speaker not understood]. the item before you today is to adopt the c-e-q-a findings for the geary bridge project. it is located in snow california and crosses over all immediate a creek within the snow regional wilderness area. the purpose of the project is to replace an existing wooden bridge with a new concrete and steel bridge that can accommodate vehicular and pedestrian traffic. the existing bridge was constructed in the 1930s and refurbished in the 1960s. the maximum loading capacity is limited to 8 tons and this restricts fire, maintenance, and cattle transport vehicles

from accessing the bridge. these vehicles must use a nearby low water creek crossing to access facilities within the watershed and can only do so when water levels allow. we have been working with various agencies to eliminate low water creek crossings within our watershed and this is one of them. the main purpose of the project is to construct a new bridge that can accommodate up to 63 ton loading, eliminate the need for vehicles to cross through alameda creek and thereby enhancing the conditions of alameda creek and allow year round access and decrease long term maintenance costs associated with the wooden bridge. a mitigated negative declaration was prepared according to the citi qua guidelines and found no significant impacts associated with the project. the planning department and sfuc commission adopted the mid gated negative declaration as well as the mitigation monitoring and reporting programs in september of 2012.

instruction is expected to start in march of 2013 and complete in february 2014. * construction the construction estimate is about $3.7 million and funding is available in the water enterprise capital improvement program. the board of supervisors adopt the c-e-q-a findings for this project. thank you, and i'd be happy to answer any questions. >> thank you very much for your presentation, brian. for this item i i believe we do not have a budget analyst report on it. so i'd like to open this up for public comment. are there members of the public who wish to speak on item number 8? seeing none, public comment is closed. do we have a motion? >> so moved. >> we have a motion to send the item forward with recommendation and we'll do that without objection. thank you. thank you. item 9, please. >> item number 9, resolution approving the issuance of wastewater revenue bonds to be issued by the public utilities commission of the city and county of san francisco in aggregate principal amounts not to exceed $250,000,000 to refund outstanding wastewater revenue bonds pursuant to the charter of the city and california government code sections 53580 et seq., and not to exceed $420,000,000 to finance capital projects benefiting the wastewater enterprise pursuant to amendments to the charter of the city and county of san francisco enacted by voters on november 5, 2002, as

proposition e; affirming covenants contained in the indenture pursuant to which the wastewater revenue bonds are issued; authorizing the taking of appropriate actions in connection therewith; and related matters. >> thank you very much for this item. we have charles from the puc. >> good afternoon, supervisors. my name is charles pearl, i'm the deputy chief officer for the san francisco public utilities commission. i have a few slides to show with you. so, we could switch those now. thanks. you've heard a lot of bond items come before you related to our water enterprise and this item is for our wastewater enterprise. we have two series of bonds that we're proposing, the 2013 a and b series. the first one is a refunding series which is authorizing up to $250 million of bonds to

refund our outstanding debt which is primarily our 2003 bonds. we typically have to wait about 10 years before we can refund outstanding debt so this is our first opportunity again to generate savings. i'll talk a little bit more about the details of the savings in a moment. but the other item is the 2013 b bonds. those bonds are expected to be approximately $420 million. the wastewater enterprise was in may of 2010 and we have spent all of those funds. that's why we're bringing forward this financing for your consideration today. just in terms of context, we have about $915 million of project appropriations that are in place for the past -- over the past four years. that's fiscal 11 through fiscal 14. some of that is funded with revenues and some of it is funded with grants and that sort of thing. so, the bonds have an outstanding appropriation authorization in place of a

little over 800 million, $821 million. now, no bonds have been issued against this authority as of yet and, so, this transaction would use up about half of that -- half of that authorization. of course, our capital planning committee as well as our commission has approved this item. in terms of what we'll spend the money on, we have commercial paper program in place, about $300 million of authorization. we'll refund outstanding commercial paper with this transaction. we have three main areas of spending in our capital program. we have an interim cip which are one-time needs in advance of our master planning process which involves pump stations, treatment facilities, facility improvements, that sort of thing. that's the vast majority of this new money transaction. we also have annual replacement. we not only fund the cash program of between 30 and $40 million a year, but we will be funding through this bond issuance about $59 million of

additional r & r, what we call r & r work which is collection of mainly working on sewer mains, collection, treatment, that sort of thing. in order to move the enterprise to a 15 mile per year replacement cycle, which is our best practice that we're aiming for. 100-year replacement goal is what we're aiming for in the enterprise. and then about a little over $100 million will be used for the sewer system improvement program. you i'm sure have heard of this. this is our larger master planning process which is coming forward. it's a 20-year program which is estimated currently right around $7 billion. our commission has taken action on the first phase of that, which is 10 years of that program, approximately $2.7 billion. so, this just over $100 million is meant to fund early program pre-design planning cost as well as the smaller lead projects. in terms of the transaction

itself, we have two sales planned next year in january and february. again, a series a and series b. we will have tax exempt bonds that we'll issue. the series a being refunding is estimated to come in at about 2% interest rate. so, that's primarily what's driving what's in the circle there in terms of repair savings. we are bringing 4 to 5% interest rate bonds down to the 2% level. of course, we want to take advantage of the low interest rate environment we have currently. and the series b bonds will be longer term debts up to 30 years and that's estimated at right around 4%. a little more details on the refunding. again, this is meant to take out our 2003 bonds, current -- if current market conditions stay as they currently are, we're anticipating a net present value savings of 14% which is pretty extraordinary, or about $31 million of savings coming back to the rate payer. again, just like mortgages and

that sort of thing, we're refunding our bonds to the lower interest rate environment. there are some details on what we'll be refunding in terms of the current debt and the charter provides the authorization for us to bring this forward for your consideration. in term of the new money bonds, we're spending approximately as i mentioned $420 million authorization. that's mainly to fund projects that were appropriated in fiscal 11 and fiscal 12. so, again, we're just in time financing here. we're bringing forward this transaction for your consideration as we need the monies. and then just over $100 million is needed for current year projects. none of these project appropriations have any reserves in place. either board reserve or controller reserve. and while these documents can be very voluminous in terms of what is before you, here's a summary of -- a list of the item that are in your packet. happy to talk to you about any of these, but these are all

standard documents. the only slight difference with this sale versus others that we've had is you'll actually see two preliminary official statements in your packet which means we have actually two sales that we're planning, one in january and one again in february. so, those two documents will actually be revised and updated as we get closer to the sales. and, of course, i'd be happy to answer your questions. >> thank you very much. and just to be clear, out of the -- in the whole transaction that we're seeing today, 250 of that is actually refunding bonds. and, so, that's not issuing new money. that's really borrowing money to take out old debt. so, in that way we're able to generate more 67c.103ings because we're refinancing pretty much at a lower interest rate from 4% to 2%, correct? * >> that's right. >> and of the 420, you're not asking for additional authorization. it looks like actually the cascade of events is that the board actually has already approved the 950 million dollars in appropriations. prop e authorization gives you 821 of that 915 and the balance is really other revenues that

makeup the difference between the 821 and 915, correct? >> that's right. there's no additional authorization. what we're actually bringing forward to you now are the transaction details. so, this body has already authorized the bond sale. what we're telling you now are the condifficulttionvs of the sale and the an dissipated interest that we'll get. * conditions >> the 420 of that 821? >> that's right. >> thank you. one other thing before we go to the budget analyst report. you mentioned it which i'm glad you did. really sort of an indication about where the puc is heading with regard to the sewer system improvement program. we just finished or are close to finishing hopefully with two large projects kind of underway. so, i think great with the [speaker not understood] program. >> that's right. >> we're pretty much getting to a point where we're well underway in our program coming to completion at some point minus those two big projects. but the next big piece that puc is going into is sewer system improvement program which is looking at essentially $7 billion. and that's significantly as a

very large project and it's even larger than the wisa program the puc had to undertake. so, i know that your commission has already approved phase 1 in terms of the 2.7 billion over 10 years. i know there is going to be an impact to rate payers and i know your commission is looking out for that. i would implore upon you and your commission as you're taking actions, it will be implemented in the future with regards to rates that you do keep the board of supervisors in the loop about where that is going simply because this is a very significant and large program, $7 billion program. >> we're more than happy to do that. and we have already put the debt -- not only the debt service from this transaction that's before you into our long-term plans that we've shared during the budget cycles, of course, but also the anticipated future debt for that phase 1 that i mentioned. all of that has been included in our planning numbers that we've shared with you and we of course update those when we come back with our budget update in the spring. >> and really, the next time that we're going to be seeing

sort of an implementation of any of the 2.7 or the additional 2.7 billion is going to be at the next rate setting process, correct? >> that's right. so, our retail rates for water and sewer [speaker not understood] fiscal 14, the next rating -- next rate 750, requires a five-year independent rate study to be conducted. we'll get that underway early in calendar 2013. we'll bring thaw back to this body as well as our commission outputs from that, from that report in the fall of 2013, which will go into our rate setting proposals for this body to consider in early 2014. for the next cycle. >> thank you. thank you. why don't we go to the budget analyst report. >> [speaker not understood] the proposed resolution, the refunding bonds of 250 million are expected to be [speaker not understood] the net present value savings of 30 million

from now and through fiscal year '25-'26. the impact on the average residential customer would be a reduction 60 cents per month for the single-family household. the 420 million dollars would actually increase the average wastewater bill each month by $5.03 per month over the 30-year period from now to termination of the bonds. however, as we state in our report, on page 2, the puc has actually made a determination to not pay a principal on the $420 million over the first 10 years. they pay interest only about 17 million a year in debt service. beginning in year 11 it would go up to 27 million of interest and principal payments both. the impact on the monthly sewer bill would be a reduction of 70

cents, 71 cents per month for the average wastewater bill. but then starting in year 11 there would be an increase from the baseline of $1.03 per month. because of the rate structure, we consider this item to be approvals of 420 million in new money bonds to be a policy matter for the board. we do recommend approval the refunding bonds. >> thank you. supervisor kim? >> thank you. i was actually going to wait for the budget analyst report to ask this question. i think i've had a couple of days to think about it. and i think i understand where the puc is headed or what it was thinking in terms of making this determination. but i think for the sake of the public, i think it's important to talk about why we are holding off on paying off the interest. i mean, paying off the principal in the first 10 years because to the average person that has home loans, we all understand that paying off the principal is a way to reduce our overall debt in the long term. and, so, this seems counter intuitive. >> supervisor, i'm happy to do that.

mr. clerk, if we can go back to the screen for a moment, i'd like to share with you a graphic which shows the structure of our debt service which might help explain sort of why we're proposing this approach. so, what you'll see in this graphic is the existing debt service, which is the bottom portion, which is our 2010 bond and the red piece to the west there is the 2013 a bonds which is the shorter term refunding bonds that we're taking out our 2003 bonds. the green piece that's above it is the 2013 b bonds and what we're trying to do here, we traditionally try to do with our debt service is have even payments for rate payers over time. and, so, the point that the budget analyst raises in their report is that debt service isn't begun to be repaid until 10 years past. essentially what that's

allowing us to do is pay down the 2013 a bonds which is the red piece and then we can begin to pay down the principal of the 2013 b bond. if we didn't do that, what you would see to the left of the graphic would be this very large spike of debt service costs that we would have to build into our rates. we had a standing policy of having even rate changes over time. and we move forward with the purchase for debt service repayment such as you see here as standard practice. >> thank you. actually, i think this was very helpful. i don't know if there were copies of that because it's hard for me to read the bottom line. >> yes, i have a few extras i'll pass. >> thank you, supervisor kim, for your question. why don't we go to public comment on this item. are there members of the public who wish to speak on item number 9? come on up.

yes, ronald robina again. of course, people po -- can't possibly understand this. i urge all staffers who work for controller's office or the puc to keep an eye out. if there's skimming or scamming or kickbacks, it's up to staffers who work at puc or the controller's office or department of real estate or parks department to actually call the fbi or call the fbi in san francisco on the 13th floor of golden gate avenue. and if there's enough complaints, the fbi will look into city government skimming and scamming and kickbacks and crone i capitalism. and they will do something about it. * crony. and to the heads of departments themselves who think that they are beyond prosecution, i want to remind them of governor

blagojevich in illinois who thought he was above the law. chris dolan is on market street right nearby. he's ready to take cases of staffers who find corruption from department heads and he's ready to defend them. thank you. >> thank you. are there other members of the public who wish to speak on this item number 9? seeing none, public comment is closed. do we have a motion to send this item forward with recommendation? >> so moved. >> we have a motion for that and we have a second. we'll do that without objection. thank you. and then on item number 1 through 8, do i have a motion to rescind the votes on these item? >> motion to rescind? >> can we have a motion to rescind the [speaker not understood]? we'll do that without objection. we heard these items without public comment. do we have a motion to send these forward with recommendation? >> so moved. >> we have a motion and second. we'll do that without objection. >> thank you for doing that. i was at a district meeting.

i had trouble getting here. you actually can't get here from there and i found out the hard way. so, somehow i made it here miraculously. thank you for accommodating my vote. >> thank you very much. we're glad you made it. i'd like to call item number 11 out of order so we can get the puc's items through. >> item number 11, ordinance authorizing, pursuant to charter section 9.118 (a), a system impact mitigation agreement with north star solar, llc, requiring north star solar, llc, to pay the public utilities commission the costs necessary to mitigate the impacts to the city's electric system caused by the interconnection of north star solar, llc's solar project to the electric grid; and authorizing similar mitigation agreements with other projects in the future; and appropriating funds from these agreements to pay the costs of mitigation work. >> thank you very much. i believe we have [speaker not understood] from the puc. if you introduce yourself. >> i'm steve ritchie from general water from the puc. on this item there are literally hundreds of proposed items trying to connect to the grid in california. a lot of these are renewable energy projects, but they all

need to connect to the grid in a way that is safe for maintenance [speaker not understood] electricity to the citizens of california. some of these projects will potentially actually impact the city's transmission facilities from the central valley and if they're not mitigated can affect our ability to provide allowable electric service to our customers. this particular project is with north star solar. they're proposing to build the 60 megawatt solar generating facility. the cost of their piece of mitigating the potential effects of connections is currently estimated to be $2.9 million. that number may actually change because it is really an aggregate number for all the projects that may connect to the system and some of those projects may fall by the wayside as they go forward. we actually have not approved any specific mitigation projects yet and before they're undertaken of course the puc will be subject to the usual steps for planning, design, review and approval including environmental review, commission review and board of supervisors review to the

extent needed. the key terms of this mitigation agreement include that north star solar would give the puc a nonrefundable payment of 30% of their mitigation costs. the that they would pay 70% prior to construction and they'll actually post security for that second payment before they actually enter into construction. and upon final payment the city would release them from any further mitigation obligation to the city. so, what we're looking for here is board authorization for the general manager to execute the system impact mitigation agreement with north star solar. substantially in the form here. that secondly, that the board would authorize the general manager to execute similar mitigation agreements with other interconnecting projects that would be from the same purpose and substantially the same form of the agreement with north star solar. thirdly, the funds received from north star solar would be appropriated to the puc to mitigate the impacts on